Trends in the Canadian Financial System
AbstractOver the 1990s, Canadian businesses became more heavily dependent on financial markets as their primary source of external funding. Data display a trend towards a more market-oriented financial system. Our econometric tests suggest that this new trend started after the 1980 banking legislation amendments. The trend was considerably accentuated after the 1992 amendments. We provide a new series for the off-balance- sheet activities of Canadian banks that measures the non-interest income of banks as a credit equivalent. Despite the market-oriented trend, this series combined with our data reveal a healthy trend in banks activities: thanks to the amendments, financial institutions are simply closer to the markets. However, our data indicate that Canadian firms issue a substantial share of their bonds in the U.S. bon market. They also issue an increasing share of their stocks in the U.S. bond market. we conjecture that there is some form of incompleteness in the Canadian markets. A noticeable fraction of Canadian issuances in the U.S. involves riskier firms for which U.S. markets seem more mature.
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Bibliographic InfoPaper provided by EconWPA in its series Finance with number 0408002.
Length: 48 pages
Date of creation: 12 Aug 2004
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Financial Regulation; financial deepening;
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-16 (All new papers)
- NEP-FIN-2004-08-16 (Finance)
- NEP-HIS-2004-08-16 (Business, Economic & Financial History)
- NEP-REG-2004-08-16 (Regulation)
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